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tv   Fast Money  CNBC  June 13, 2012 5:00pm-6:00pm EDT

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one thing. up 8% year to date. still a winner for 2012. thank you so much for being with me. i hope you will follow me on twitter. i will see you on friday. fast money begins right now. take it away melissa. >> the stock market was a loser today but there was one winner. >> we will confess our sins and not take our eye off the ball. >> floats like a butterfly on the hill and stings the bears like a bee. >> the ceo completes his testimony before the senate banking committee and j.p. morgan's stock has started climbing again. was it just an act for congress? >> he is a loser because he had no control and doesn't know what happened. you go in there as a guy who was
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stupid, you don't come out being smarter. you don't. you come out just as stupid. >> tonight we will settle the great diamond debate. we will trade the wacky up down market. no time to paste. this is fast money. live from the nasdaq markets, i'm melissa lee. we got to get to the markets today. getting back some of the gains made. big story j.p. morgan and the big stock move there. >> that clearly took up a lot of time. there was not a lot of actual news out today in the market to really move things. there were plenty of rumors. everybody is speculating what the greek election is going be. made for good tv but not sure it made for any type of investment. nobody nose what is going on. now we have the moody's
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downgrade of spain. >> is that a driver in tomorrow's session? >> it's hard to know. i thought a lot of people were concerned about a spanish bail out. means the existing spanish bondholders find themselves -- they are definitely losing priority. >> they are subordinated. >> and putting more pressure on the bonds at a time that it should be helping them. ppi is not something we should be paying a lot of attention to. when you see that deflation on a headline ppi, you don't invest in commodities, especially for all the reasons. it put more pressure on the materials sector and the retail sales number which everybody knew was going to be week. it was a very week number and much worse than expected. having said all of that, i think that markets look very interesting and are holding up. when i look at emerging markets
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and people know i look at them all day, they have traded very well and have ground around and put in a reasonable bottom here. >> would you say the same thing about the u.s. markets and they held up well considering they turned? >> like he said, everyone was focused on jamie diamond. there were olot of softball questions and he did a good job in a lot of ways. underlying that when the banks were trying to rally here, retailers were having a hard time going back to what tim just said about the retail sales numbers. when you see names, there were a couple of weeks ago 5%. underarmor, names people are looking for for growth. you see some of the names like
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tiffany and coach. >> dan mentioned some of the high end retailers. terrible days today. i wonder if you get concern. >> i think, there is some fear. but also remember the high end multiple stocks, they are high. they don't -- yeah. they have less room for error. i don't know that macy's should be in that. macy's customer, which is the bulk of their business, is really not so much the high end. i like to be in the targets and ral materials of the world. they were down today but not a bad day for both. >> let's string together data points. you pointed out whole foods.
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these are estimates but for these stocks with high valuations, you have got think twice about this. >> whole foods, i guess they misspoke. they said sales were going to be in the range of 13% versus 15%. hour and a half later they corrected that. this is a stock that they trade at least 32 times in next year's earnings. >> for whole foods it's very important. they have had a history of beating estimates for a short time. so when you start to hear that from them, from a company that can beat estimates, it's concerning. >> do you think that terra nova stopped shopping there? >> they did not cut guidance. that was the first headline. >> it was a price action that told you that people wanted to
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sell first. let's talk about japan morgan. did you hear anything that made you rethick the stock at all? >> he does not know it. >> we will just keep it between us. >> i was astounded. every time i'm surprised at how embarrassing our representatives to us. >> their complete lack of understanding in the business. i just, you know, they wanted to say whatever they wanted to say. there is a big disagreement about them taking the $25 billion in t.a.r.p. i only have five minutes so let me not get dis.
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>> we did see a nice climb in the stock. he actually joins us here in person. it's great to see you in person. has the bottom in the stock been placed? have we gone through the worst of this? >> i would think so. it's pretty clear that this episode today was more for the public use as opposed to any real legislation coming out of it or any real information that would be new or mentioned. >> so if -- who will be asked to give back some of their compensation. does this issue really end? they will not be offering more clarity down the road. >> if you take a look at j.p.
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morgan versus fortune r500, thee are only five companies that make more than j.p. morgan. the company hires $260,000 people. they added 15,000 people. the earnings will be up this year. the earnings will be up 15% this year. what in heaven's name do these people want. >> do you believe that the office group was conducting trades that were purely to hedge the bank's risk. >> i definitely believe there was proprietary trading going on. let's assume you knock the earnings of japan morgan down 25%. it will be one of the 12 biggest
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earners of any company in the united states. in addition to which it sells at a discount to book value, which makes absolutely no sense whatsoev whatsoever. >> so talking about that earnings, what is the driver of that earnings? if trading is gone and we're looking at a global slow down, where are you going get that? the earnings growth that you talked about? >> first off you got to realize that everything that could be going right is going right right now. by that i mean you are seeing a moderate increase in lending. cni lending is up 15% year-over-ye year-over-year. you are seeing banks flooded with deposits. you see banks increase prices on just about any non-interest product they are selling. on top of that you are getting a reduction in the loan losses.
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so if everything is going right for these companies, and it is, then you should see it in earnings. >> one might drk. >> should consumers be outraged by that? at least when the money is in our banks because they are gouging like they have never been able to gouge before. >> what are they in business for? do you tend to invest in companies that are there for social purposes because they're going to grow trees in central park or because they gouge people and make money. >> gouge them please. >> thanks for dropping by. we do appreciate your time.
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we ask the question. dick may like j.p. morgan but is the smartest trade to avoid j.p. morgan now that it is in focus. and maybe washington wants you to plant trees? >> that's kipd of my poind. i clearly want them to make as much money as they can. >> and the financial spider. take a look at the underperforms. this is back to 2010. testifying before the senate. this is april 2010. down more than 40% compared to the 16% decline for the overall sector. perhaps the bottom is not in. dick said it was. karen what do you think? >> i hope it is. i like to think it is. i think sit is a different set f circumstances. it's not that the j.p. morgan
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thin thing. what i think will be the next catalyst of meaning here is the next earnings call and to hear what are the extent of the losses. what is the future of the cio? do they plan on raining in that desk? >> murphy, do you think this all goes away once j.p. morgan reports its quarter or thor if vefr makes it better? >> i think specifically right now you have to look at j.p. morgan. when you there is a big loss out there that jamie diamond did not touch on at all on what the loss is going to to be, i don't know why you would invest in that. i would look at other banks, wells fargo or bank of america. jamie diamond did a phenomenal job today and fook everybody to
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school. i wouldn't jump in front of the trading loss. >> what sort of activity tdid yu see as jamie diamond's stock rose during testimony? >> it is interesting leading into this. call open interest right now is at an all time high over the past 52 weeks and the puts are right about the highest level. it seems to me that people are interested in making at least risk mitigated bets on it. if you compare the interest c there is no question that the options activity is more bullish there. >> coming up next, you could be getting it all wrong. an expert will reveal facts about the most popular etfs out there and could have you re-thinking your strategy. and karen has thought up a name that might make you want to have a parade. lots more straight ahead.
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>> welcome back to "fast." the mess in europe has been a w winning trade as well. outperforming similar companies that are more global. one of the examples they pulled out. they have got a lot of different pairs. mcdonald's versus jack in the box. so we decided to get our top usa trades here. it is just an excuse to play that. >> that's not the last time we see that graphic. >> that's a winner. >> my pick is archer daniels.
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you have seen a huge corn crop this year. along with this goes a stronger dollar. >> i like deer. this is mostly u.s. it traded relatively in a predictable range. between 72 and 82 bucks. i would start thinking about it. 15% ebitda margin. it becomes a more proficient company. the hit that has been going on in the ag space. these guys will have a strong year. i think traded well. i would buy it today. i would trade this thing up to 80, 82 and trade the range
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again. >> you got a usa trade for us? >> just looking at it, toll brothers, 100% u.s. focused versus a whirlpool, only 51% of whirlpool's revenues coming from the u.s. tolls had a great run here. >> i want to highlight one pair. mcdonald's versus jack in the box. mcdanlds has 32% and is down. i mention this because of the goldman sac's downgrade today. are we at a point now where the move into the usa oriented stocks is too late? >> you mean the multinationals? your point i think people are
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underestimating. all of these people that love what they are doing, i also think that these stocks have gotten expensive. they have gotten defensive. but the fx hit, watch it. >> nathan is taking a look on berish positions. that sounds like your phrase. certainly not mine. >> this is actually a good segue. walmart is a name let's focus on here. they get 2/3 of their stocks from the u.s. and so you know this is a company that missed their sales estimates. but the stock is working because it pays that dividend. i think people are piling into
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it. i amberish on it. i want july puts. they are really cheap. the 30 day realize it. i guess my point is if you are looking to make bearish bets c the flip side is if you are along the stock and you are nervous about them, everything is going to go down. sell your stock, buy a call. >> next trade here. are you using the wrong etfs in your portfolio? some are more popular than others but that does not necessarily make them your best bests. five ways you may be using the wrong etf. in terms of wrong versus right, what are you talking about?
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>> you are getting the best exposure. if you are trying to target china, getting the best you want. >> does it factor in fees as well. >> fees are small right? take china. most of the money first one, the one we all know. the ticker. it only owns 25 securities. it has no exposure to technology or consumers or ent pe nearal. >> nothing that you want? >> right there are other funds. gxc, but everyone buys fxi because that is what they know. >> if you drill down it stops at the top. >> i agree with you. people look at a plis like brazil. the real brazil is not bali.
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>> i think that is exactly right. those are multinationals. >> i want to get through the five potentially wrong and right etfs. gold? we always talk about the gld. probably the most liquid and volume but you say that is the wrong one? >> this one is easy. they hold the exact same thing and returns. it's half the cost. that's a no brain fore me. >> and the financials, iyf is not one we talk about but it's the right one? >> only firms located a quarter of a mile from here. iyf gives you the full spectrum. >> junk bonds? wrong one is jnk. >> both are very successful but
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hyg has slightly better tracking and safer securities. given what is happening in the economy right now, investors might want to be a little more conservative. >> i may have to rethink my own. dvy is the wrong one. what's the difference? >> an interesting question. everyone knows ddy. it's a good fund. but it takes a little different angle. more payout and lower volatili y volatility. higher yield. that seems like i am looking for what i'm looking for. >> the fifth one, small caps. we always talk about iwm. not the right one? >> there are two issues. it goes really small creates a head wind of costs. there are other securities out
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there. avoids the rebalance cost, especially in june. >> a lot of people there are reaching for statements. thanks a lot for coming by and setting the report straight. i want to go back to headquarters. steve? >> melissa, thanks very much. timothy geithner just finishing a q & a session giving us insight into how the your peeps feel about the current crisis. they know this is different from the other blow ups we have had in europe. they know we don't have a lot of time and they are not minimizing the risks when they speak to us. he added they do come to him and ask for advice quite often but the u.s. is content to play a behind the scenes roll. he expects europe to step up and
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clarify so i think what we are hear something telegraphing that not everything will come out of the g-20. but he called on europe to put forward more clear policies. >> all right, steve. thanks for that. does this make you feel any better? >> no. it's a serious situation. the only way europe has to get people to do what they need is to bring the system to the brink to create a crisis and then make the change and then you come back. we will be in that process for a long period of time. that game can break easily. >> coming up next, low rates? no worries. ways to build income with an investing pro. recently, students from 31 countries took part in a science test.
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ttd#: 1-800-345-2550 let's talk about market volatility.
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ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550 >> >> welcome back to "fast money." corporate balance sheets continue to look strong. target raising its dividend by 20%. cat increasing by 13%. sit the largest increase since
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2008 for cat. they finished lower by 2%. i think that is more of today's. at the end of the day, caterpillar is executing. >> a zero return world. how should you be positioned to build income. and co-manager of the investment income builder fund. great to see you. >> great to be here. >> your fund looks truly defensive in the waitings that you have now. telecom being your biggest.
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>> when we talk stocks, tell con is where it's at. we think they have the ability and willingness to pay higher dividend next year than what we will get this year. >> no verizon which is 100% dmesically oriented. >> the reason we don't is we have a large position in vodafone. they have announced a goal to increase it to 7%. we didn't want to double down on that. we think that that is a better way to play than than verizon. >> do you -- are you looking for
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a specific percentage yield or is it driven by a pay-out ratio where you can feel more comfortable about the ability to maintain? what are the criteria for you? >> we like it all. but you don't always get it all. we have some that are below three and some above ten. it's around 6 in the entire portfolio. >> which of those do you think could actually increase those dividend? the next six months? >> yeah. i will look at it on an annual basis. most dividend increase annually. vodafone will stick to their dividend increase. i believe that at & t can
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increase its dividend but it will be very modest. switching to the energy companies, we have a big waiting there have the ability to increase their dividend in this environment. they have the ability to increase those dividend. i expect them to be conservative. >> that's good enough for us. >> we're going to leave it there. brian mcmahon, ceo. that is a very interesting pick. and also the stake in verizon. >> they are one of the most global. i warn ability a lot of the european guys. >> i think their business is changing. talked about the your peeps. 7% yield.
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>> coming up, we are continuing to break down the testimony on the hill. stay tuned to find out how deep his ties are to the very people he testified against. more straight ahead. ♪ ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪
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>> >> greed, arrogance, lack of attention to detail. but if you do a good job your clients are being served and you win their business. >> that, of course, j.p. morgan jamie diamond testifying earlier today on capital hill. >> it may not come as a surprise to you --
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>> shocking news. because they were able to push this back. i am told that jamie diamond was out of the country. that allowed a lot of the outrage to seep out of the story a little bit. another thing that could not have hurt is the contributions. take a look at what i'm talking about here. they have give on the all but six and diamond personally gave money to senators in 2012 and given money to the top democrat and republican in past years. he gave $55,000 and you remember in that year.
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at the end of the year he gave $50,000. we should say that diamond as pulled back the personal campaign giving since 2008. none the less that's how you develop relationships in washington. you spread the money around ask you will win some friends. >> thanks a lot for that report. it is no secret that congress and bankers have a contentious relationship. you wrote in a column a couple of days ago that jamie diamond should come out swinging. do you think he did that? >> i think he established his view on things. he talked about how it is not stuff he can disclose rigtd now. a private matter between him and his shareholders.
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not like they are stewards but actually running private companies that can fail without all of us being on the hook. regulations and a couple of guys in jc penney suits to stop banks from losing money. they will lose money and they will fail. it's just crazy that you are lulled into a false sense of security. i think it happened in spades just today. i think we got more of that. >> it is amazing to consider the other issues that congress could be dealing with right now. anticipates that it will be a
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major overhack on growth next year. >> here we are focused. everybody everywhere of all political purr swagss on how a bank with 8 million of capital that makes 6 billion lost two billion on trades in london. know we're all nervous because we have no faith that these things won't happen over and over again. think about the huge issues that we have ahead of the country. and we're watching it all play out in spain and greece. we're just sitting fat and happy because we can sell money at 1.6%. >> i agree with you. i think banks should fail. if these guys fail, there will be significant dominos to fall.
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5 the rock of our financial system. >> remember they were playing with $350 billion of excess dpos its. they make 700 billion in loans. they had 1.1 trillion of dpos its. they have got to do something with that money. why do they have so many deposits? nobody on earth thinks these guys will fail. so they are sitting there enjoying and taking huge advantage. maybe it's a problem for them. they are sitting there with way too much money. they don't know what to do with it. this is all, again, because nobody is pricing the risk at all. they are pricing it as if they know for sure. governments are good on it. >> good to speak with you.
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rob cox. tim mentioned the record low yields. it was 1.62%. the fear train alive and well. so this sent you into the history books to look for comparisons to another time. >> if we look at what has happened over the past two to three years, we have had a housing market come off. that is similar to what happened during the 1970s. and we had a real nice rally. then in 37, you had something change. similar to what is going on now. fdr wanted to balance the budget. no difference there. you are cutting spending. the federal reserve was raising requirements. people are going to have to cop serve more.
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we have political uncertainty. obviously very, very volatile politically. europe is a fall cry from that. it is a safe haven trade. the u.s. did not inflate as it should have. the fed has come out and now has an inflation target. if we get money flowing into the u.s. and what the fed should do is let the p economy inflate so the rest of the world does well. >> solution? war. that's what took us out of this. >> extrapolation, there is no solution? >> they don't have war. it's a little scary.
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>> it doesn't have to go that way. that's what happened on 37, 38. >> coming up next we will be hearing from j.p. morgan who upgraded johnson & johnson. he is finally saying the stock is a buy when we are back. at u.s. trust, our expertise extends well beyond investment advice and research analysis. it includes proprietary offerings like our eldercare program, which helps provide for those who came before you. and our financial empowerment program, which helps prepare those who come next. resources like these have made us the number-one trust company. that's why generations of families have come to us to help build their own legacies. high schools in six states enrolled in the national math and science initiative... ...which helped students and teachers get better results in ap courses.
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>> it has been more than three and a half years since j & j was downgraded. the s&p 500 was up nearly 36% and now nine time number one rated analyst is getting bullish again on johnson & johnson shares. great to have you with us, mike. you point out there are a number of factors. one of the factors is the pipeline. the pipeline is not priced into the stock at this point. what is the number up with drug that you are most excited about? >> right now j & j has a series
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of products that have launched that are driving acceleration and revenue growth. there is an alzheimer's product that they share with pfizer. i wouldn't buy j & j for it. sit a great entry point in a stock that has not moved. >> is that pipeline reflected or is their upside possibly to the 74 because of the pipeline? >> that probably depends a bit on the tape. if you are looking at a flat market over the next 6 to 12
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months you probably need some pipeline to kick in. i think that $74 is a reasonable target and we will see what happened in their end markets and the broader take. >> i am curious on their international exposure and their fx head wind, stuff we have talked a lot about, how does that play into your valuation? >> it's -- it's an issue for all of these companies, right? j & j has large exposures in yump. they hedge out and have a lot of natural hedges. really where they get caught up is in the emerging markets where most companies don't hedge. most of them are relative to the dollar. for j & j, i think it is
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manageab manageable. those are names we have more concerns on. >> thank you so much for your time. we hope to see you back sometime soon. what do you think of this upgrade? and you actually have an options actions trade? >> dan was talking about walmart being a low volatility name. johnson & johnson is eessentially the exact same thing. one way to spend very little is look at the july 65 calls. the stock was lower than it is right now. wi by doing that you would forsake a 27% difd end. that will capture the earnings that come up in july. >> karen has got a trade of the day that is so good that it
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>> >> tim, it's time. you have been waiting for this moment all along. trade of the day. >> the trade of the day is macy's. it was really because of the reaction today to the retail sales number. the stock got hit 5%. it seemed way overdone to me. they got a lot of tail winds. they are taking share from jc penney. cotton prices are going down approximate to me, valuations, that has been a good place to buy macy's. plus it's the end of the story. two and a half percent, a little less than that. for all those reasons, macy's at 35 is the stock of the day. get it with the parade and be
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thankful. >> and in store. very, very nice. >> so clever. >> not only is it a great stock pick. >> the real feter in the cap. >> mike murphy you agree with this? i spoke with terry and i asked him about market share fwans from jc penney and he said it is not just them. there are a number that they are gaining share from. >> listening to terry this morning, he pretty much said all the right things and the stock reacted well initially. macy's just got crushed today really underperformed jc penney's. so i'm in there with karen buying the stock. we bought more of the stock today and i think it goes back into the low to mid 40s quickly. >> stay tuned. [ male announcer ] at scottrade,
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if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this. >> >> time for the final trade. >> look at the dow stocks. >> halliburton. >> tim? >> tsu, brazil. >> j.p. morgan. >> kampb? >> m.


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